Gene once again cannot repay internal debt
2023.01.16 12:51
Gene once again cannot repay internal debt
By Kristina Sobol
Budrigannews.com – Ghana’s Finance Minister Ken Ofori-Atta announced on Monday that the registration deadline for the country’s domestic debt exchange has been extended once more to January 31.
The nation in the midst of a crisis launched the debt swap plan at the beginning of December, just a few days before reaching a staff-level agreement with the International Monetary Fund (IMF) for a rescue package that would cost $3 billion.
Ofori-Atta wrote on Twitter that “building consensus is key to a successful economic recovery for Ghana” and that registration for the debt exchange would be extended “pending further stakeholder engagement.”
The IMF has stated that the deal will only be approved by its board if Ghana goes through a comprehensive debt restructuring.
The debt swap’s initial deadline of December 19 had been extended to December 30 and then to January 16.
After a public outcry, changes to the initial offer removed exemptions for pensioners but added exemptions for individual bondholders.
Monday’s extension, in contrast to previous ones, did not provide bond holders with any additional incentives. Investors are concerned that the program may struggle to attract participants without new terms.
In the meantime, there has been little success in encouraging participation from repeated extensions and frequent structural changes.
Gergely Urmossy, an emerging market strategist at Societe Generale (OTC:), stated, “(Ghana) wants to see voluntary applications and participation in the programme, but the sudden and frequently seemingly unexplained changes in the proposed DDE framework do not build confidence.”
In exchange for registering for the exchange, Ghana made a cash payment of 2% to holders of its 2023 bond last week. However, opposition to the program has remained widespread.
Gregory Smith, emerging markets fund manager at London-based M&G Investments, stated, “Ghana spent a lot of money solving the problems it had with its banks from the 2014-2015 crisis, so you want to think very carefully to avoid jeopardizing them.”
According to Reuters, Ghana requested a restructuring of its bilateral debt last week under the common framework platform, which was supported by the Group of 20 major economies.
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